INTERPRETATION OF CONTRACTS UNDER ETHIOPIAN CIVIL CODE: SUBJECTIVE OR OBJECTIVE METHOD?
Hussein Ahmed Tura
(LL.B, LL.M, Lecturer, Wolaita Sodo University, School of Law.
Formation and interpretation of contracts are influenced by the objective and subjective theories of contracts. Objective theory of contracts gives emphasis to the contractual assent that is “determined by analyzing external evidence” rather than the subjective or internal intention of the contracting parties. This theory regards contract formation on the basis of communication, and not cognition. On the other hand, the subjective theory of contract holds the view that “subjective assent has little to do with external perceptions, but rather is concerned with whether the parties each subjectively intended to make the contract.”
Interpretation of contacts plays a crucial role in the domestic and international business transactions. However, the legislatures, courts, and the legal academies of different countries of the world present considerably diverging views on the issue of the intent of the parties in the process of interpretation. For instance, in the European Union, the courts in the common law countries (the UK, Ireland) have voiced a preference for relying on objective manifestations of the parties’ intentions (objective method of interpretation); while in the other Member States (Germany, Austria, France, Italy) the doctrine of the subjective interpretation takes precedence.
The Ethiopian legal system is characterized by its reception of substantial elements from continental law and common law legal systems. Though there are many concepts from the common law legal system particularly incorporated in the procedural laws, it has been pictured for its zealness to the continental law legal system due to the fact that its substantive laws have been mainly transplanted from this legal system. Nevertheless, since the two legal systems currently are mixed or at least mixing, it is difficult to conclude that the substantive laws, mainly Civil Code, of Ethiopia are solely influenced by continental legal system. One has to conduct the empirical research to reach genuine conclusion, particularly, whether subjectivist civil law’s theory of contract solely influence the formation and interpretation of contracts under Ethiopian Civil Code or whether there is influence of the objectivist common law theory of contracts.
The purpose of this essay is to examine the extent to which the rules of contract interpretation under the Ethiopian Civil Code are influenced by the objective and subjective theories of contracts. With the view to substantiate the theoretical aspect with the practical reality in light of contract interpretation in Ethiopia, the essay will examine the approach followed by the Federal Supreme Court in deciding one of the cases involving contract of sale of immovable presented before it.
 Wayne Barnes, The French Subjective Theory of Contract: Separating Rhetoric from Reality, (Works-in-progress presentation, Texas Wesleyan University School of Law, August 26, 2008), p.5